Introduction:

This blog critically examines the current implementation of the Export Market Development Grants (EMDG) payment system, focusing exclusively on the inefficiencies and ineffectiveness of the current payment process consistent with the stated ‘Purpose’ of The Export Market Development Grants program – Strategic Refocus Consultation Paper. i.e., “to maximize the intended benefits to business and Government of EMDG grants and to better support Australian exporters to develop new markets in line with the Government’s trade diversification priorities.

Section 11 of the EMDG Act empowers Austrade to make up front payments. We believe that Austrade should recommend to government that making up-front payments to all eligible applicants who have accepted a Grant Offer, from 01 July each year for the relevant grant period will support their trade diversification priorities.

Inefficient & Ineffective Payment Process:

The current payment approach has proven to be highly inefficient for grant recipients, as it hinders their access to grant funds precisely when they need them most i.e., in advance of their marketing and promotional activities.

Consequently, this approach has resulted in underspending by applicants, preventing them from fully leveraging the potential benefits of EMDG grants and falling short of their planned goals. We believe this misalignment is rectified by implementing up-front payments to all eligible applicants at the commencement of the financial year.

What exacerbates the inefficiency of the current payment system is that it does not facilitate the grantee’s spending of the grant money within the grant period as intended. Instead, the process compels the grantee to use their own funds equal to the grant amount, plus an equivalent matching amount of their own money, before eventually receiving a ‘reimbursement/grant’ after submitting a successful milestone report. A payment process taking approximately 14 months or more after the commencement of their marketing and promotional activities. This approach fails to provide timely assistance to businesses limiting the intended benefit to businesses.

The current payment system is in my view not what was intended by the parliament when it passed the EMDG Act empowering the government of the day to set the rules. The opportunity for this government is to refocus the rules to ensure upfront payments for all eligible applicants enabling the grantee to spend the grant money in the grant period precisely when they need them most.

Refocusing with the objective of the EMDG Act

The object of the EMDG Act is to bring benefits to Australia and this is to be done by providing targeted financial assistance, for promotional activities and development of marketing skills, to Australian small and medium enterprises and their representative organisations.

By refocusing the current payment system to up-front grant payments, Austrade can ensure a more effective and strategic utilization of taxpayer funds that have been appropriated to achieve this objective. An upfront payment system would inject the entire appropriation into the Australia economy from the commencement of each financial year, being put to work bringing those intended benefits to Australia as rather than sitting idle in treasury.

Maximizing Benefits to Businesses:

For the EMDG Act to realise its full potential, the government must ensure that businesses have access to grant funds in advance of their marketing and promotional activities. By doing so, the program can truly maximize the benefits that EMDG grants offer to businesses.

A failure to refocus to upfront payments will continue to result in underspending by many applicants, entrenching the current inefficient and ineffective allocation of funds lessening the benefits to Australia and the financial assistance to Australian businesses.